Ryanair's third bid for rival Irish airline Aer Lingus has hit the buffers after the European Commission announced its intention to launch an in depth investigation into concerns about that allowing the takeover could harm competition.
Dublin-based Ryanair has already stated it will re-bid for Aer Lingus in the new year, provided the Commission clears its offer.
In 2007, the Commission told Ryanair that its proposal to let go of take-off and landing slots at Dublin airport as a compromise for taking over Aer Lingus wouldn't be enough to make sure there was enough competition, because it didn't believe other airlines would step in to fill the gaps.
According to the FT, Ryanair has approached at least six airlines – Air France-KLM, easyJet, Etihad Airways, Flybe, International Airlines Group and Virgin Atlantic – asking them to consider providing services on some of the routes jointly operated by it and Aer Lingus, but the response has been muted.
Earlier this year, the Office of Fair Trading referred Ryanair’s minority shareholding in Aer Lingus to the Competition Commission under the UK’s merger control legislation, a decision that was warmly welcomed by Aer Lingus itself.
In a press statement at the time, chief executive Christoph Mueller, said Ryanair’s shareholding in Aer Lingus is contrary to the interests of consumers and the majority of our shareholders.
"It is unacceptable that our principal competitor has been allowed to remain on our share register even though the European Commission blocked their hostile takeover almost five years ago... we are confident will result in Ryanair being ordered to dispose of its shareholding," he said.
The major problem as far as the EC is concerned is Ryanair and Aer Lingus are the two main operators out of Dublin airport. On a large number of European routes, mainly out of Ireland, the two airlines are each other's closest competitors and barriers to entry appear are high.
Any takeover could therefore lead to the elimination of actual and potential competition on a large number of these routes, according to the Commission.
The body now has 90 working days to make a decision, reporting its findings on 14 January, 2013.
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